SHRI BHARATKUMAR ABHECHAND SHAH,BHAVNAGAR vs. THE ACIT.,CIRCLE-1,, BHAVNAGAR

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ITSSA 193/AHD/2010Status: DisposedITAT Ahmedabad12 June 20234 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessment framed by the Assessing Officer (AO) was not maintainable and sustainable. The core of the dispute was the jurisdictional authority for framing the assessment. While the revenue contended that the ACIT, Circle-1, Bhavnagar, had jurisdiction based on the CIT-VI's order dated June 8, 2009, which in turn relied on the section 120 order dated August 1, 2001, the Tribunal perused the section 120 order itself. The Tribunal found that this order clearly indicated that jurisdiction lay with the Additional/Joint Commissioner of Income Tax, Range-1. Therefore, the assessment framed by the ACIT, Circle-1, who did not have valid jurisdiction, was quashed. Consequently, the ground of appeal concerning jurisdiction was allowed. As the assessee succeeded on this technical issue, other contentions challenging the assessment's validity and merits were not adjudicated and were dismissed as infructuous. The operative direction was to quash the assessment.

What were the facts?

The assessee, Bharatkumar Abhechand Shah, filed an appeal against an assessment order passed under section 158BC of the Income Tax Act, 1961, for the assessment years April 1, 1985, to March 31, 1995, and April 1, 1995, to December 21, 1995. The assessee challenged the assessment's validity, arguing it was framed without proper jurisdiction. The assessee contended that jurisdiction lay with the Addl. CIT/Jt. CIT, Bhavnagar Range-1, as per an order dated August 1, 2001, while the assessment was framed by the ACIT, Circle-1, Bhavnagar, who holds a lower rank. The revenue, citing a previous ITAT order, stated that the matter was remitted for settling jurisdiction. The Commissioner of Income Tax (CIT)-VI, Ahmedabad, subsequently passed an order under section 124(4) on June 8, 2009, holding that jurisdiction vested with the ACIT, Circle-1, Bhavnagar.

What were the issues?

1. Whether the assessment framed under section 158BC read with section 254 of the Income Tax Act, 1961, is valid, considering the jurisdictional authority for the assessment period. Assessee's contentions: The assessment is not sustainable as it was framed by the ACIT, Circle-1, Bhavnagar, who lacked proper jurisdiction. Jurisdiction was vested with the Addl. CIT/Jt. CIT, Bhavnagar Range-1, as per the order dated August 1, 2001, issued under section 120 of the Act. The ACIT, Circle-1, holds a lower position than the Addl. CIT/Jt. CIT. Revenue's contentions: Following a previous ITAT order (IT(SS)A Nos. 8 & 9/RJT/2002 dated July 11, 2008), the matter was remitted to the Assessing Officer (AO) to settle jurisdiction by referring it to the appropriate authority. Subsequently, the CIT-VI, Ahmedabad, vide an order dated June 8, 2009, under section 124(4), held that jurisdiction vests with the ACIT, Circle-1, Bhavnagar. The revenue relied on this order and argued that the CIT's order under section 120 dated August 1, 2001, was correctly interpreted by the CIT-VI, Ahmedabad, and that section 127 of the Act was not applicable in this case due to departmental restructuring.

Which sections of the Income-tax Act were involved?

Section 158BC,Section 254,Section 120,Section 124(4),Section 127,Section 124(2),Section 124(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘’D’’ BENCH, AHMEDABAD

Before: SHRI WASEEM AHMED & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri D. K. Puj, A.R
For Respondent: Shri Sudhendu Das, CIT D.R
Hearing: 14/03/2023Pronounced: 12/06/2023

आदेश/O R D E R

PER WASEEM AHMED ACCOUNTANT MEMBER:

The captioned appeal has been filed at the instance of the assessee against the order of the Learned Commissioner of Income Tax-VI, Ahmedabad (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 158BC of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 01.04.1985 to 31.03.1995 & 01.04.1995 to 21.12.1995.

2.

The assessee has challenged the validity of the assessment framed under section 158 BC read with section 254 of the Act on the ground that the same has been framed without proper jurisdiction.

IT(SS)A no.193/AHD/2010 Asstt. Year- 01.04.85 to 31.03.95 & 01.04.95 to 21.12.95 2

3.

At the time of hearing, the Ld.AR submitted that the jurisdiction over the assessee was vested with the Add.CIT/Jt.CIT Bhavnagar, Range-1, by virtue of the order bearing No. HQ-VI/6-4/1/Jurisdiction U/s 120/2001-02 dated 01/08/2001, placed on pages 181 to 184 of the Paper Book. But the assessment has been framed by the A.C.I.T Circle-1, Bhavnagar who holds much lower position in ranking than Add.CIT/Jt. CIT. Therefore, the assessment has been framed by ACIT circle-1 without having proper jurisdiction and consequently the assessment in dispute is not sustainable/maintainable. On the contrary, the Ld. DR before us vide letter dated 23-3-2023 submitted as under:

“2. In this case, the Hon'ble ITAT vide order in IT(SS)A Nos. 8 & (/RJT/2002 dated 11.07.2008 for the Block Period 01.04.1985 to 21.12.01995 had set aside and remitted the matter back to the AO to settle the matter of jurisdiction by referring the same to the Appropriate Authority, and thereafter make the assessment of the assessee. Following the direction, a reference was made by the ACIT Cir-1, Bhavnagar vide his letter F.No. ACIT/Cir-1/124/BAS/08-09 dated 03/02/2009 which was forwarded vide endorsement No.BR-l/Cent.BAS/2008-09/498 dated 10.02.09 of the Addl. CIT, Bhavnagar Range-1, Bhavnagar to the Commissioner of Income-tax, Ahmedabad-VI, Ahmedabad.

3.

Vide order u/s. 124(4) of the I T Act dated 08.06.2009, the Commissioner of Income-tax, Ahmedabad -Vi, Ahmedabad has held that the jurisdiction over the assessee vests with the ACIT, Circle-1, Bhavnagar and the matter of jurisdiction was decided accordingly as per the directions contained in the order of Hon'ble ITAT. In the said order, the CIT-VI, Ahmedabad had categorically rebutted the objections of assessee that the order u/s. 120 dated 01.08.2001 excludes the cases transferred u/s. 127 of the IT Act from the operation thereof. The relevant para No. 8 & 9 of the order is reproduce here below for ready reference:

"8. The aforesaid submissions are not found acceptable as the assessee has not correctly appreciated the provisions of section 127 of the Act. Consequent upon the restructuring of the department, the post of erstwhile Assessing Officer i.e. DGT(asst), Special Range-8, Ahmedabad stood abolished and the present Assessing Officer, namely, ACIT, Circle-1, Bhavnagar was vested the territorial jurisdiction over the cases of the assessee as per the order u/s.120 dated 01.08.2001 passed by the CIT. Section 127 of the i.T. Act empowers the Commissioner to transfer a case from an Assessing Officer subordinate to him to another Assessing Officer. In the p case, since the post of the Assessing Officer i.e. DCIT(Asst.), Special R? Ahmedabad under CIT(Central) stood abolished as a result of the restructuring of the Department, no order u/s.127 was required to be passed by the CIT(Central) as it was not a case of transfer of jurisdiction of the assessee from an Assessing Officer under, his jurisdiction to another Assessing Officer. The Hon'ble Tribunal also in its said order dtd. 11.07,2008 has only observed that the provisions of Section 124(4) of the Act have not been complied with by the Assessing Officer and has accordingly remitted the matter back to the file of the AO for settling the matter of jurisdiction by referring the same to the Appropriate Authority. The assessee's contention that CIT (Central) was required to pass an order u/s, 127 for transferring the case from Bhavnagar to Ahmedabad is therefore not found tenable.

IT(SS)A no.193/AHD/2010 Asstt. Year- 01.04.85 to 31.03.95 & 01.04.95 to 21.12.95 3

9.

It may further be mentioned here that the provisions of Section 124(2) come into the picture when there is clash of jurisdiction i.e. when a question, arises whether a particular or another officer has the jurisdiction to assess a person. If the question is one relating to more than one area within the jurisdiction of one and the same Director-General or Chief Commissioner or Commissioner, the Director-General or Chief Commissioner or Commissioner shall determine which of the Officers shall have the jurisdiction to make such assessment. In the present case, the post of DC1T (Asstt.), Special Range-8, Ahmedabad stood abolished and the present Assessing Officer viz. ACIT, Circle-1, Bhavnagar came to acquire jurisdiction as per order u/s. 120 passed by the CIT, As such, there was no question regarding clash of jurisdiction between two Assessing Officers which could have been settled by referring the matter to the CIT or CCIT. As already stated, the present Assessing Officer i.e. ACIT, Circle-1, Bhavnagar was vested with the territorial jurisdiction over the case of the assessee as per the aforesaid order u/s. 120 dtd, 01.08.2001. The present Assessing Officer i.e. ACIT, Circle-1, Bhavnagar has therefore rightly exercised the jurisdiction over the said case. A reference in this regard may also be made to the provisions of Section 124(5) of the Act. It may be emphasized here that the said Section 124(5) opens with a non- obstante clause "notwithstanding anything contained in this Section or in any direction or order issued under section 120" The certified true copy of the said order of the Commissioner of Income-tax, Ahmedabad- VI, Ahmedabad is enclosed herewith for kind perusal and necessary action.”

4.

We have heard the rival contentions of both the parties and perused the materials available on record. The controversy in the present case is limited to decide which authority of income tax whether Additional CIT/ Joint CIT Range-1 or ACIT Circle-1 has jurisdiction over the assessee for the block period in dispute so as to frame the assessment. According to the learned DR the jurisdiction over the assessee lies with the ACIT Circle-1. The basis of the argument of the learned DR was the order passed by the Commissioner of Income Tax Ahmedabad-VI vide letter dated 8-6-2009 wherein it was clarified that the jurisdiction lies with the ACIT circle 1. On perusal of the order of the Commissioner of Income Tax Ahmedabad-VI, we note that the reference has been made by the Commissioner of Income Tax to the order passed under section 120 of the Act dated 1 August 2001. Thus, the entire basis of the revenue to hold the jurisdiction over the assessee of ACIT circle 1 was the order passed under section 120 of the Act dated 1 August 2001. We have perused such order, placed on pages 181 of the paper book along with the schedule and find that the jurisdiction lies with the additional/ joint Commissioner of Income Tax range 1. The relevant extract relating to the jurisdiction is placed on page 183 of the paper book. Thus, there remains no ambiguity to the fact that the jurisdiction was vested with the additional/ joint

IT(SS)A no.193/AHD/2010 Asstt. Year- 01.04.85 to 31.03.95 & 01.04.95 to 21.12.95 4

Commissioner of Income Tax range-1 for framing the assessment for the block period in dispute whereas the assessment has been framed by the ACIT circle 1. It is the trite law that the person who has been authorized to frame the assessment can only do the same. In the present case, the assessment framed by the authority without having valid jurisdiction. Accordingly, we hold that the assessment framed by the AO in the given case is not maintainable and sustainable. Accordingly, we quash the same. Hence, the ground of appeal of the assessee is hereby allowed.

5.

As the assessee has succeeded on the technical issue discussed above, we are not inclined to decide the other contentions raised by the assessee challenging the validity of the assessment at the time of hearing.

6.

Furthermore, once we have held that the assessment framed in dispute is not sustainable as the same has been made by the person having no jurisdiction over the assessee, we are not inclined to adjudicate the issue raised by the assessee on merit. Accordingly, we dismiss the same as infructuous.

7.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the Court on 12/06/2023 at Ahmedabad

Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 12/06/2023 Tanmay TRUE COPY आदेशक���त�ल�प�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent. 3. संबं�धतआयकरआयु�त/ Concerned CIT 4. आयकरआयु�त(अपील) / The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण/ DR, ITAT, 6. गाड�फाईल / Guard file. आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपील�यअ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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